I'm sure my initial scepticism of the new polymer based brake idea was not unique to myself. I can recall other posters shrieking at the idea of plastic brakes. The more I research this new product however the more begin to appreciate the significance of this enhancement to their marketing mix.
Whilst we all know that the polymer based brakes are roughly half the cost and weight of their metal based version, what I didn't appreciate is that the new polymer brake is also lower maintenance as it is not encased in oil, rather it is an enclosed dry brake; thereby circumventing the need for oil changes. What makes this so special you may ask?
It may only take a week for an operator of a vehicle in rough wet terrain (such as many surface mines) to chew through a set of brake pads. The expensive and inconvenience would be highly undesirable. The new polymer based brake addresses that situation as it is a low maintenance fully enclosed braking system that is perfect for challenging wet terrain. My understanding from talking to management is that the payback period for such extreme applications is a mere 3mths; so clearly this market niche are going to be very interested in this new product.
The only downside is that the new polymer based product it is not a "Fail Safe" brake, but that is where the differentiation in the marketing mix becomes more evident. There are natural client that require a fail safe brake regardless of the cost, whereas there are other clientele that require a more reliable / lower maintenance braking solution.
As other posters have also pointed out. SUVs continue to grow market share and the demographic bulge from baby boomers turning into grey nomads looking to go feral in the four wheel drives highlights another new potential market. The further these mums & dads want to go off the grid so to speak (i.e. more remote) the greater their desire for a more reliable braking system. ABV's original fail safe wet brake is overkill in this situation however and too expensive for these grey nomads. The new polymer based brakes however could change that for a subset of those four wheel drivers.
Suffice to say, that given the extent to which ABV has been broadening its distribution around the world and broadening their product range they are introducing real options into their business. When viewed holistically ABV is better placed that any point in history to reap some truly economic rent from their IP.
Only time will tell whether ABV can exercise these embedded real options into the sort of growing revenue stream we'd like to see.
ABV Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
